An Empirical Analysis of the Relationship between Real Estate Investment and Regional Economy in China

China has gone through dramatic development in the last decade. Since 2010, China Gross Domestic Products (GDP) surpassed Japan as the world's second-largest economy. That fact showed a signal of the economy recovery from the recession, and leads a number of literatures to work on the triggers to the Chinese economy. There is no doubt that real estate investment, as a component of GDP, plays a fundamental role in economic growth.;Many literatures have discussed the topic of real estate investment and economic growth from different perspectives. In this paper, the author will go over some researches and studies in the related field. Some professionals started their research from testing the Granger causality between investment and economic growth. Other professionals focused on figuring out the mechanism between these two sectors and how these two sectors influence on each other. In this paper, the author will also discuss the topic from above two ways.;In the first section, the author will develop an empirical analysis based on the provincial data in China from 2000 to 2013. Firstly, the author will employ a cluster analysis by dividing the 31 provinces into East, Middle and West districts based on their locations. In the second section, the author will discuss how to analyze the relationship and Granger causality between real estate investment and economic growth theoretically. The author will reexamine the Granger causality between real estate investment and economic growth in each district, which will be regarded as the basis of further analysis.;On the basis of theoretical and empirical analysis in previous two sections, the author will investigate the impact what real estate investment has on urban development and vice versa. In conclusion, real estate investment can Granger cause the economic growth, while economic growth can also Granger cause the real estate investment. Furthermore, during the study period, real estate investment has observable influence on economic growth in China. Last but not least, the author would like to discuss what factors could be potentially involved in the relationship between real estate development and economic growth based on qualitative analysis, and put forward some recommendation for policy makers.;Keywords: Real Estate Investment, Economic Growth, Panel Data, Granger Causality.